WorldCity Business Magazine

Trade finance & dirty money

by WC

The Financial Action Task Force, an international agency that combats money laundering and terrorist financing, has spotlighted trade finance as an area vulnerable to global criminal activity.

As a result, trade financing will be among the hot topics at this months anti-money laundering conference sponsored by the Florida International Bankers Association.

In 2006, the money-laundering dangers posed by global trade were underscored in a special “Trade Based Financing” report by Financial Action Task Force. The report identified three ways of moving
dirty money: through the financial system, through cash couriers and other services that transfer money and through the movement of goods within the trade system.

“In recent years, the Financial Action Task Force has focused considerable attention on the first two of these methods. By comparison, the scope for abuse of the international trade system has received relatively little attention,” the report concluded.

“The international trade system is clearly subject to a wide range of risks and
vulnerabilities that can be exploited by criminal organizations and terrorist financiers,” the report said. “In part, these arise from the enormous volume of trade flows, which obscures individual transactions; the complexities associated with the use of multiple foreign exchange transactions and diverse trade financing arrangements; the commingling of legitimate and illicit funds; and the limited resources that most customs agencies have available to detect suspicious trade transactions.”